PPOR Loan

Discussion in 'Loans & Mortgage Brokers' started by hvdw87, 2nd May, 2019.

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  1. hvdw87

    hvdw87 Well-Known Member

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    Hi,

    I am looking for recommendation of mortgage brokers that could assist me getting a PPOR loan in Melbourne.

    Serviceability should not be an issue, but deposit is going to be a struggle, so anyone with expertise in minimising LMI would be good.

    Cheers
     
  2. Simon Moore

    Simon Moore Residential & Commercial Mortgage Broker Business Member

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    There are a few Melbourne based broker on the forum, have a read of what they have put out and see if they resonate with you.

    There are a couple of lenders running 20% discounts on LMI at the moment which may work for you.
     
  3. Trainee

    Trainee Well-Known Member

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    Dont assume anything.
     
    Jess Peletier likes this.
  4. Jess Peletier

    Jess Peletier Mortgage Broker - Australia Wide Business Member

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    Hey there - unless you qualify for a professional package - accountant, doctor, lawyer etc, the best way to reduce LMI is to use equity in another property - either one you own, or via a guarantor. Do you have access to anything like that?
     
  5. hvdw87

    hvdw87 Well-Known Member

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    True. I will rephrase. Seviceability should not be an issue in the price range I am looking at.
     
  6. hvdw87

    hvdw87 Well-Known Member

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    I could potentially get access to a parental gaurantee as a last resort.

    I am an engineer so not sure if that qualifies for a professional package.
     
  7. Peter_Tersteeg

    Peter_Tersteeg Finance broker and strategist Business Member

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    Unfortunately there are no longer any LMI waivers for engineers. If you want to avoid LMI then you will need either a 20% deposit (and purchase costs), or to use equity from elsewhere (likely the family guarantee scenario).

    Paying LMI isn't the end of the world. Okay it's money being paid that's not to your benefit, but if it allows you to borrow 90% or 95% of the property value, you've at least got your foot in the door.
     
  8. hvdw87

    hvdw87 Well-Known Member

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    Yes that is true, my concern is if its LMI on top of average interest rates if you are say look at the 90% LVR.

    I find it odd that besides either a deposit or guarantee, there appear to be very limited opportunities to avoid LMI.
     
  9. Peter_Tersteeg

    Peter_Tersteeg Finance broker and strategist Business Member

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    Most lender price their variable rates on LVR so I agree that the 90% loans don't look very attractive and 95% makes my skin crawl. One easy way to deal with this is to use fixed rates for part of the loan, in most cases these aren't LVR dependant. By the time a 2 or 3 year fixed rate ends, the LVR is often below 80% through either growth in the value of the property or via extra payments. It's not perfect, but it does mitigate the problem.

    LMI is a function of LVR. A larger contribution or equity from elsewhere reduces the LVR. If there's another way to get the LVR below 80% I'd love to hear ideas. :oops:

    The LMI wavers out there apply to certain medical professions and there's a few offers for lawyers and accountants with additional qualifying criteria. I don't thing that LMI is eliminated in these deals, rather the lenders use a mechanism that allows them to wear the cost themselves.

    Nothing out there for engineers that I'm currently aware of, or finance professionals either. Pity because I could qualify in either category.
     
  10. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    Deposit or equity , guarantee and LMI are forms of risk transfer from the lender to another party.

    In the current climate, dems the options.

    There is a 4th, there are some lenders that will do NO lmi to 85 , but the rate premium isnt worth it usually, instead of a one off premium, you will be reminded every time you pay your mortgage

    Not so long ago, mainstream lenders like WBC had 85 no lmi policies for pretty much anyone, and in the mid 2000s, 100 % lends werent unusual with CBA and suncorp offering same amongst others.

    thats not coming back soon

    ta
    rolf




    ta

    rolf
     
  11. hvdw87

    hvdw87 Well-Known Member

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    So if you are limited in your options at the lenders, are there alternative ways to get to 80% (or close to) through other means? Essentially get that additional cash from another source that may end up being cheaper than LMI or LMI + higher rate?
     
  12. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    At 80 % you are home and hosed :)

    Im a scientist, and you are an engineer.

    We both hate generalisations and assumptions because the wrong numbers can end up killing people

    what dollar value is the purchase price pls

    very diff strategies for a 250 k buy to a 1.5 mill buy


    ta
    rolf
     
  13. hvdw87

    hvdw87 Well-Known Member

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    Looking at a $800k-1mil purchase. Deposit of about $100k
     
  14. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    does that 100 k need to include stamps ?

    ta
    rolf
     
  15. hvdw87

    hvdw87 Well-Known Member

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    Yep!
     
  16. Peter_Tersteeg

    Peter_Tersteeg Finance broker and strategist Business Member

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    Are you thinking a personal loan to make up the difference? I won't say it's not possible, but incredibly unlikely.

    Lenders generally don't like you to borrow significant amounts for the deposit. From the figures you've indicated you're going to have $45k - $57k in purchase costs, you're going to need roughly $150k - $210k to avoid LMI. I suspect you will have trouble demonstrating the serviceability with a personal loan of that amount in your financial profile.

    Your family could 'gift' you the cash.
     
  17. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    so objectively for the risk transfer side of things we have about 45 k deposit, with the balance going to costs of various sorts

    assume a mid range purchase at 900 k

    835 lend on 900 k = 92.7 % lvr

    Lets assume u can find some extra to get it to 92 %

    At 92 % lvr the premium would be 30 k in round figures

    828 lend + 30 k lmi = 858 / 900 = 95.33

    I suggest the biggest issue isnt LMI minimisation, its getting access to a loan at all.

    95 % LVR is the practical upper limit for most lenders

    hard to see how we can get around the LMI without a guarantee or saving longer, or you have a HUGE income and can get sufficient personal loans and credit cards .......... and that is probably not wise either


    ta
    rolf
     
  18. hvdw87

    hvdw87 Well-Known Member

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    Thanks Rolf. I was actually wondering whether maxing out a credit card, say $50k, then balance transfering that across to a say 2yr no interest card would be an option?

    Not sure when the banks need to see the deposit vs your credit card limits though. And obviously there are some big risks involved in this process
     
  19. Simon Moore

    Simon Moore Residential & Commercial Mortgage Broker Business Member

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    Potentially, but $50k in credit cards will hit your borrowing power by around $250k. You have 5% genuine saving so this strategy may be possible. But how long would it take you to build up $50k on a credit card? This may be a red flag for living expenses being high.
     
  20. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    I would call that frying your credit file

    Youd also need some sensational serviceability for all that fly

    Most LMI providers wont allow you to use borrowings as balance of funds to complete

    Family guarantee looks very very tempting

    ta
    rolf